A monetary policy tool where a central bank targets a specific yield on government bonds of a particular maturity by committing to buy or sell unlimited quantities to maintain that rate. YCC differs from quantitative easing in that the central bank targets the price (yield) rather than the quantity of bonds purchased. The Bank of Japan famously implemented YCC in 2016, targeting the 10-year Japanese Government Bond yield near 0%, and the Reserve Bank of Australia briefly adopted a similar policy targeting the 3-year yield.
Example
“The Bank of Japan widened its YCC band to allow the 10-year yield to rise to 1.0%, a move that sent shockwaves through global bond markets and strengthened the yen.”